The Four Drivers of E-Commerce Growth in China

on January 15 2014 | in Digital | by | with No Comments

Online Shopping

The rate of China’s e-commerce growth continues to take many by surprise.

China’s large and growing middle-class are making frequent purchases online. More importantly, they are “developing brand awareness, an increasing proclivity to purchase high quality and/or individually satisfying products, and showing a commitment to brand loyalty and repeat business,” according to a recent publication from KPMG.

KPMG believes that e-commerce in China is driving a new consumer culture. That is echoed by Alibaba founder Jack Ma who says e-commerce is not just “a way to shop but a lifestyle.”

There are four drivers of e-commerce growth in China: e-commerce platforms, social media platforms, digital payments platforms and mobile devices.

They are transformative, both for the industry and for consumer behavior, “including the way they [consumers] research and order products online, and their preference for speed and convenience.

Social media platforms have become a staple in the lives of Chinese e-consumers with almost instantaneous feedback and easy-to-use interfaces. According to recent e-commerce statistics in China, 40 percent of China’s online shoppers read and post reviews about products – more than double the number in the US.

“Accompanying the rise of e-commerce in China is a clear trend towards mobile devices. In 2012, mobile transactions totaled US$7.8 billion, representing 3.7 percent of all e-commerce transactions in China. However, by 2015 mobile commerce in China is forecasted to more than quintuple, to US$41.4 billion, representing eight per cent of all e-commerce transactions,” KPMG said.

China’s e-commerce market is dominated by Alibaba, owner of Taobao and Tmall. Although not as well-known outside China, Alibaba sold more merchandise (in terms of value) in 2012 than Ebay and Amazon combined. By 2016, Alibaba expects to surpass Walmart as the number one retailer in the world.

According to KPMG, “By 2015, e-commerce transactions in China are projected to hit US$540 billion, or 7.5 per cent of total retail transactions, and by 2020, China’s e-commerce market is forecasted to be larger than those of the US, Britain, Japan, Germany, and France combined.”



image credit: tim reckmann

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